The New Medi-Cal Recovery Laws
For individuals who die prior to January 1, 2017, the current recovery rules will apply, however, a new day will arise starting January 1, 2017. Starting January 1, 2017, homeowners will longer have to choose between healthcare or passing their home to their children. CANHR has provided a booklet which outlines applicable rules for both the current law, and the new law.
What is Medi-Cal?
Medi-Cal is California’s version of the Medicaid program that is funded jointly by the state and federal governments. It is designed to provide free or low-cost medical assistance for low income or low-resource individuals. There are many different Medi-Cal programs, and eligibility may depend on factors such as age, disability, income or assets. Covered California is California’s version of the Affordable Care Act’s health insurance exchange. It is not a Medi-Cal program. Any tax credits or subsidies received through Covered California are not subject to Medi-Cal recovery.
New Law! Medi-Cal Cannot Touch Your Home
California Senator Ed Hernandez says that Medi-Cal recovery forces homeowners who are over age 55 and who need Medi-Cal to choose between their own health care or passing their modest homes to their children.
Many have echoed the same sentiment that millions of low-income Californians age 55 and older are reluctant to enroll in Medi-Cal because they are afraid that the state will take their house when they die. It is true that California’s Medi-Cal program has long looked to the house that mom and dad have left to their children to recoup public money spent on the parents’ healthcare in the last years of their parents’ life.read more
The Top 10 Benefits of a Comprehensive Power of Attorney
The benefits of a highly detailed, comprehensive power of attorney are numerous. Unfortunately, many powers of attorney are more general in nature and can actually cause more problems than they solve, especially for our senior population. This article is intended to highlight the benefits of a comprehensive, detailed power of attorney. A proper starting point is to emphasize that the proper use of a power of attorney as an estate planning document depends on the reliability and honesty of the appointed agent.
The agent under a power of attorney has traditionally been called an "attorney-in-fact" or sometimes just "attorney." However, confusion over these terms has encouraged the terminology to change so more recent state statutes tend to use the label "agent" for the person receiving power by the document.read more
10 Benefits of a Medi-Cal Asset Protection Trust
Never before has there been such a rapid growth in people turning 65 years of age or older and these seniors are expected to live longer than any previous generations. Living longer also means higher medical costs. Many parents spent most of their lives working to pay off their home mortgages and they would like to pass these homes on to their children. The federal government gives California approximately $17 billion per year as part of the Medi-Cal health insurance program. Medi-Cal is funded by the federal government but administered by California. Californians can use Medi-Cal to fund for their health care and still leave their house to their children if they plan ahead.read more
What's the difference between Revocable & Irrevocable Trusts?
California laws allow you to create trusts that will spare your heirs from the horrific, expensive and time consuming probate process. There are two categories of trusts: revocable trusts and irrevocable trusts. It is crucial to understand the advantages and disadvantages of each because neither one is a "one size fits all" solution.
Everybody’s life is unique and people have different objectives, needs and family dynamics. These factors will shape which type of you trust you should have . Both types of trusts allow you to transfer assets (your house) to a trustee who will administer and ultimately distribute the assets (your house) to the beneficiaries (usually your son and/or daughter) as provided in your trust. But the main difference between the two types of trusts is that the revocable trust can be changed at any time by the maker of the trust prior to the maker’s death; whereas an irrevocable trust cannot be changed without the consent of all the trust’s beneficiaries. The trust beneficiaries are the ones who are getting the assets in the trust.read more
Medi-Cal Planning Preserves Homes for Children
Aging is inevitable, but lucky for us, medical technology continues to improve, which has increased our life expectancy. As we live longer, long-term medical care costs continue to raise. The super wealthy in America can easily pay for their long-term medical costs and thus the focus of their estate planning is on how to minimize their estate taxes because their estate will be taxed at a rate of 40% of the amount that is over the federal estate tax exemption of $5.45 million per person.
However, for most middle class Americans, one of the major ways of financing their long-term medical costs is through Medi-Cal planning because for them to pay for their own long-term medical care would deplete their lifetime savings.read more
Homeowners: 2016 New CA Law to Protect Your Home from Probate
In California, there are a variety of ways to hold title to your home that will dictate who will become the new owner of your home when you die. Starting January 1, 2016, California homeowners can add a new way of holding title to their homes called the "Revocable Transfer on Death Deed" (TOD deed). TOD deed is a non-probate deed whereby you as the homeowner may deed your home to a named beneficiary and the transfer becomes operative on your death but will remain revocable until you die.
California Assembly Bill 139 created the "Revocable Transfer on Death Deed" (TOD deed) as an alternative "poor man’s" estate planning instrument to avoid probate without having a trust. It was approved on September 21, 2015 and will take effect on January 1, 2016 and expires on January 1, 2021. The TOD deed covers only one to four residential dwelling units, a condominium or agricultural land of 40 acres or less with a single-family residence. Tread more
Most Famous Tax Loophole for Real Estate Owners
Real estate owners buy real estate hoping to accumulate and build wealth for themselves and their families. However, some real estate owners are not aware of the biggest tax loophole when it comes to passing their real estate wealth on to their families.
The most famous tax loophole for real estate owners is the “stepped-up basis”. When you inherit a house, the current IRS tax code gives you a stepped-up basis in cost. Your stepped-up basis is the market value on the date of your benefactor’s death. This taxpayer-friendly rule allows heirs to sell the house they received and owe nothing to the IRS.read more
Real Estate Asset Protection
Did you know that you can create legal entities that you can use to protect you real estate assets? This article is a summary of the common ways of vesting title in legal entities that real estate investors use for asset protection.
Three legal entities that you can create are C-corporation, S-Corporation, and Limited Liability Company (LLC). Both C-corporation and S-corporation are formed by filing legal documents with the Secretary of State of California. Both of these corporations are distinct entities from the owners and thus shield the owner-shareholder(s) from personal liabilities stemming from the corporations. The difference is that the S-corporation is able to be taxed directly to the shareholders and avoids the double taxation that a C-corporation brings.read more
How Medi-Cal Can Be Dangerous to Your Home?
Many homeowners who are under the California Medi-Cal health plan are concerned about whether their homes will be taken away from their children after their deaths because they used Medi-Cal during their lives. Although, California is one of the most liberal states out of the 50 states, there some traps for the unwary to consider. Therefore, read on because one day you or your loved one might need Medi-cal. Below are some common questions that I have assembled so that homeowners can make wise and informed decisions when applying for Medi-Cal.
What is Medi-Cal?
Medi-Cal is the short name for “California Medical Assistance Program”. Medi-Cal is California’s version of Medicaid, which is the Federal Health Insurance Program for people and families with low incomes and resources. California participates in Medicaid under the name Medi-Cal.read more
What's In Your Living Trust?
This article will summarize and shed some light on what a living trust can and cannot accomplish. This article is constructed in terms of questions and answers. These are the common questions that I get in my estate planning and probate seminars.
Will vs. Living Trust: What is best for me?
A Will may not be the best estate planning document. A Will is only valid when you are dead. Furthermore, Wills need to be probated in California. A California court will need to validate the Will. The court will appoint the executor to be in-charge of your estate through the probate process. However, a living trust does not go through probate. A living trust has all the applicable California Probate Codes built into it to avoid the messiness of the probate court’s involvement.read more
Estate Tax: Will Your Family Have to Pay?
The first estate tax was imposed in 1797 to help fund a war against France. The estate tax became a permanent fixture in our tax system after World War I. The estate tax is a tax on real estate, stock, cash, and other assets transferred from deceased persons to their heirs. Will your children or heirs have to pay taxes on the house and other assets that you are leaving to them? If your children have to pay, the current estate tax rate is a whopping 40% PLUS applicable capital gains tax rate between 15% to 20%!read more
Three Estate Planning Items Everyone Needs
We all own assets in one form or another. When we die, we want to make sure that the assets are properly going to those we love. We also want to minimize any confusion, unnecessary legal fees and stress for our loved ones.
There are three essential items that everyone needs to have in place to ensure their wishes are carried out after their death.read more
Joint Tenancy Increases Unnecessary Tax Liability
When a husband and wife hunt for a home, they consider factors such as the neighborhood, the quality of the school district, curb appeal, or the condition of the house.
However, they frequently overlook something else that is perhaps just as important: how they take title to their new home. It’s a fact that most married couples choose joint tenancy. However, joint tenancy will create future tax liabilities if one of the spouse dies and the property is sold.read more
What is the difference between a “Will” and a “Living Trust”
Most homeowners do not know the difference between a “Will” and a “Living Trust”. This article will explain the basic differences. In Southern California, if you own a home, you should definitely have some sort of estate planning. Having a will or a living trust is what the legal community refers to as “estate planning”. Both wills and living trusts are documents that facilitate the passing of your assets at your death to whom you want them to go to. If you don’t have a written will or living trust, then the California’s intestacy law controls and dictates who gets your assets.read more
10 Percent Deposit?
Are purchasers in a probate transaction required to submit a deposit of 10% of the purchase price in Los Angeles, Orange, Riverside, San Bernardino, or San Diego Counties?
The answer depends on whether your have full authority or limited authority.read more
What Happens If You Die Without a Will?
If you die without a will (also known as dying "intestate"), the State of California will decide how your assets are to be distributed. All community property and quasi community property will be given to your spouse. Separate property will generally be distributed according to California Probate Code 6401 and 6402:.read more
What Realtors Must Know About Probate
In California, if your client dies without a living trust and his or her house is worth more than $150,000, then the only way you can sell the house is to have your client go through a probate.
The probate process starts with filing of the probate petition. You cannot sign the listing agreement unless the court has issued your client a form called "Letters". Letters signifies that your client is the official personal representative of the deceased’s estate. This form will tell you if the personal representative has either full or limited authority to sell the house. If you are selling real estate, you always ask the probate attorney to petition the court to give your client full authority.read more